House prices hit standstill in 'fragile and lacklustre' market

House prices hit a standstill in June following three consecutive months of price rises, according to new figures from Hometrack.

Seven regions across England and Wales reported a fall in prices, compared with just three in March, while two recorded no change. 

London was the only region to see an increase in prices – boasting a modest rise of 0.3%.

‘Looking at price trends within regions, the survey shows that house prices were down across 23% of the country in June. This is almost double the level of price falls recorded over each of the last two months,’ said Richard Donnell, director of research at Hometrack.

‘The increase in the extent of price falls has been seen largely in southern regions outside London where prices are softening off a high base on weaker demand and growing uncertainty,’ he added.

The number of new buyers fell for the first time in five months as economic uncertainty and eurozone fears took their toll. Overall demand was down by 0.5%.

The number of new homes coming onto the market, on the other hand, has continued to grow – which means supply has outstripped demand for the past three months.

With demand set to fall further over the summer as the seasonal slowdown kicks in, the balance between supply and demand will likely widen – pushing down prices further, according to the property website. The Olympics are only likely to contribute further to this.

'The overriding story from the 1,500 respondents to the survey is of a fragile, lacklustre housing market where buyers remain concerned by the UK economy and wider eurozone. This echoes the "large black cloud of uncertainty" comments by Bank of England Governor Mervyn King in his recent Mansion House speech,' Hometrack concluded.

The news comes as government figures reveal that house prices in London have risen some 7.7% over the last twelve months, compared to the likes of Yorkshire and the Humber and the North East which have seen falls of 3.9% and 3.5% respectively. London also reported the biggest monthly increase in May, with prices up 2.6%.

This brings the average house price in England and Wales to £161,677, said the Land Registry.